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3 Tutorials that teach Budget Constraints: Change in Price
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Budget Constraints: Change in Price

Budget Constraints: Change in Price

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Author: Catherine Barry
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Notes on "Budget Constraints: Change in Price"

Terms to Know

Budget Constraint

The graphical depiction of consumer income relative to the  price of goods available. Where the budget constraint touches the highest  indifference curve available, the consumer is defined to be optimizing consumption.

Prices

The cost of goods or services.

Income Effect

Consumers’ purchasing power changes as income changes,  affecting demand for a good or service.

Substitution Effect

When income decreases or price rises, cheaper goods and services are consumed instead of the more expensive alternative.